Upward mobility? Earnings trajectories for recent immigrants

by Ben Brindle, Madeleine Sumption & Jonathan Portes

This analysis uses new data from HMRC to show how the size and earnings of the migrant employee workforce have changed over time in recent years. This is the third version we have produced, and uses data to December 2024.

Background and broader trends

Large shifts in migration have taken place over the past decade, driven both by migration policy and developments in the labour market more generally. From 2014, the number of jobs held by EU-origin employees grew sharply after transitional controls restricting free movement with Bulgaria and Romania were lifted. This growth slowed after the Brexit referendum, before the pandemic led to a significant reduction in the number of EU resident workers.

In January 2021, the introduction of the post-Brexit immigration system ended free movement while liberalising migration for work from outside the EU. Non-EU migration grew sharply between 2021 and 2023, particularly in the health and care sector, after care workers were made eligible for Skilled Worker visas in early 2022. However, non-EU migration slowed sharply in 2024, as some of the temporary factors that boosted migration after the pandemic receded, and new restrictions introduced by the Conservative government reduced both student and care worker migration. These developments are summarised in Portes (2025) and Sumption, Brindle and Walsh (2025).

Figure 1, below, shows the impact of this on the size of the workforce as a whole: the number of non-EU origin employees has doubled from around 1.7 million to 4 million, accounting for all net labour force growth since the pre-pandemic period.

Figure 1

However, these overall numbers reflect movements both in and out of the UK labour market. Freedom of Information (FOI) data from HMRC allows us to identify new entrants to the employee workforce each year. Figure 2 shows the very sharp post-pandemic rise in new entrants  from outside the EU in the post-pandemic period, with more than 1.2 million in 2022 and 2023 alone. The number of new entrants fell back in 2024, to 478,000, but remained at historically very high levels.

Figure 2

While the number of work visas rose sharply during this period, this only accounts for part of these numbers – for example, about 210,000 skilled work visas were issued to main applicants in 2024. The remainder will include international students, the dependants of people arriving on student and work visas, humanitarian arrivals from Ukraine and Hong Kong, as well as people who moved to the UK in earlier years but had not worked before.

Meanwhile, the number of EU workers appearing on payrolls for the first time fell steadily towards the end of the 2010s and then more sharply during the pandemic. In 2024, the number of new EU employees was 85% lower than in 2015, at about 50,000. This is not necessarily an indication of the level of new arrivals to the UK as the number will include people who have the right to reside and work in the UK under the EU Settlement Scheme but had not previously worked as employees (e.g. people who were students, had caring responsibilities, or were self-employed).

Attrition from the employee workforce

The HMRC data provide crucial insights, not available from any other data source, into how long migrants remain in the employee workforce over time, because we can track how many people who first appeared in, say, 2015 were still in the dataset a few years later. If people disappear from the dataset, it will not always mean they have left the UK: some will have stopped working, for example, to care for children, or become unemployed or moved to self-employment, although return migration is likely to be the major reason over the longer term.

Of the EU-origin migrants who registered in 2015, just under half were still on payroll in 2024 (Figure 3). Non-EU origin migrants were more likely to remain in the employee workforce, although attrition was still significant. For UK-origin workers, it was unsurprisingly much smaller, but still represented 1 in 6 workers, most likely due to moves out of employee status and into retirement or other forms of inactivity. For established workers—that is, those who first appeared in the dataset in 2014 or earlier—attrition rates were lower, with 60% of EU-origin workers and 70% of non-EU origin workers still in the data in 2024.

Attrition rates are considerably lower among non-EU employees who entered the workforce between 2020 and 2023, reflecting the change in non-EU migration patterns post-Brexit. In other words, non-EU employees became more likely to stay in the employee workforce in this period. The sharp increase in the number of people coming to work in the health and care sector is one likely reason. In addition, international students have been more likely to stay in the UK after their studies. This owes to the introduction of the post-study ‘Graduate Visa’ in 2021, and the post-Brexit liberalisation of work visas, which made it easier for former students to switch directly to work visas. For more information, see the Migration Observatory commentary, International students entering the UK labour market.

Figure 3

Earnings of new entrants to the employee workforce

The HMRC data also provide information on migrants’ earnings and how their distribution has changed over time. As noted above, the end of free movement and the introduction of the post-Brexit immigration system have changed the composition of people coming to the UK. This will also affect the earnings of new arrivals. For example, the new immigration system requires EU workers to meet salary requirements, while free movement did not. On the other hand, skilled EU workers who are eligible for work visas under the post-Brexit immigration system might find the UK less attractive due to Brexit or the end of free movement.

For non-EU workers, the increase in the number of people coming to the UK could, in theory, result in either higher or lower earnings among new entrants. The non-EU origin group includes larger numbers of skilled workers than in the past. However, the Skilled Worker salary threshold was significantly lower between 2021 and 2023 than before Brexit, particularly for care workers after they were added to the route in February 2022. In addition, many people arrived on other visas with no earnings criteria (such as Ukrainians or international students working part-time during their studies); and dependants of those on work and study visas can work in any job. There was a large increase in the number of asylum seekers granted refugee status in the UK, particularly in 2023. Finally, the Graduate Visa allows international students to work in any job for two years after completing their studies. The expansion of the non-EU origin workforce has occurred across a number of sectors, including some where work visas are unlikely to be the main factor.

How then has the post-Brexit immigration system affected the skills and thus earnings profile of non-UK labour market entrants? If we look at median earnings in the year of entry, the trend is surprisingly flat for both EU and non-EU origin workers (Figure 4). From 2015 to 2019, each newly arriving cohort of non-EU citizens earned progressively more, when compared to the UK workforce median. This upward trend ended with the pandemic and post-Brexit immigration system, and there was some decline in 2024, taking new non-EU employees’ median earnings back to levels seen in the pre-Brexit period. Earnings for new cohorts of EU-origin workers were marginally higher than pre-Brexit.

If we look at migrants at the end of the first full year of employment (i.e., after removing those who spend only a short time in the UK employee workforce), relative earnings improve for each successive non-EU cohort from 2015 to 2021. For the most recent, very large cohorts, we see surprising stability: after one full year in the UK labour market, each cohort from 2021 to 2023 was earning between 93% and 95% of the UK average, almost the same as for the much smaller 2019 cohort, which arrived under a completely different system. Meanwhile, while EU-origin migrants have improved their relative position slightly, it again does not appear to be hugely different from that prevailing in the pre-2019 period, despite the fact that the immigration rules for EU workers became much more selective.

Figure 4

There is, however, somewhat greater evidence of change if we look at the distribution of earnings, with significant earnings compression among newer non-EU entrants. At the 75^th percentile, they have fallen somewhat behind the overall workforce, while at the 25^th percentile, they have overtaken the overall workforce. In other words, the proportion of new non-EU entrants on either very high or low pay fell. Meanwhile, the earnings distribution of EU-origin workers has widened over time—at the 25^th percentile, EU-origin workers’ relative earnings (after the first year) fell, while earnings grew sharply at the 75^th percentile.

On average, then, non-EU migrants newly entering the employee workforce under the post-Brexit immigration system appear to have broadly similar (and perhaps slightly better) earnings compared to people entering before Brexit. There are various possible explanations for this surprising stability in recent migrants’ earnings, despite the high shares of non-work migrants.

First, not everyone on non-selective routes has low earnings. For example, Skilled Worker dependants granted a visa in the year ending March 2024 had median annual earnings of £30,200, broadly in line with median earnings for the overall workforce. By contrast, dependants of health and care workers who entered over the same period had lower median annual earnings (£22,100) as did partners of British citizens and settled residents.

Second, recently arriving migrants may have been more likely to work full time than others in the workforce (earnings are reported monthly to HMRC, while hours worked are not reported). For example, the share of recently arrived non-EU citizens who held study visas declined from 2019 to 2024 despite high numbers of student arrivals, because other migration categories were also rising rapidly; and international students who work will generally have low earnings because they are not permitted to work more than 20 hours a week.

Third, our data is limited to those on payrolls, so it does not include self-employment, and there is certainly anecdotal evidence that substantial numbers of recent migrants are in relatively low-paid self-employment (notably delivery jobs in the “gig economy). If the size of the migrant gig-economy workforce has increased significantly (and this is not known), the impact on earnings will not be reflected in our data, although the numbers are likely to be much smaller compared to the large number of employees in our data.

Employment rates

Unfortunately, our data does not tell us anything directly about employment rates (and hence about the overall fiscal impact of recent migration). The limited available evidence suggests that employment rates for those on non-work visas vary widely by immigration category, with asylum migrants and partners of British citizens and settled residents less likely to be in work. Between 2021 and 2024, total net non-EU migration was estimated at approximately 3 million, of whom 80 to 85% are likely to be of working age. As of December 2024, approximately 1.8 million of those in the employee workforce were non-EU migrants who had joined the workforce since 2021. For the reasons set out above, these figures are not directly comparable, although they do suggest that employment rates among recent migrants are not far off existing residents or long-standing migrants. The limited evidence we have from the Labour Force Survey is consistent with this.

New entrants’ earnings progression over time

The HMRC data allows us to look at earnings trajectories over time for the same cohort of migrants. A key caveat to all of the analysis is that because many migrants leave the employee workforce (as shown above), changes in average earnings over time may partly reflect changes in the composition of the workforce due to emigration.

On the one hand, some theories of migrant self-selection suggest that migrants who succeed in the labour market are less likely to emigrate; however, some studies find the opposite, particularly for highly skilled workers, who may simply be more mobile. For example, there is evidence that out-migration of EU workers since 2019 has been particularly marked in relatively low-paid sectors like accommodation and hospitality, which might bias estimates of earnings growth for EU-origin workers upwards. However, this is less obviously the case for non-EU origin workers. Existing data suggests that migrants who come to the UK from outside the EU for family reasons or to claim asylum both have much lower earnings and are much less likely to leave, while most work migrants leave within a few years.

How do the average earnings of newly arriving migrants change over time? Figure 5 shows the median earnings for those entering the labour market in a given year, relative to the median earnings of the entire workforce in that year.

Figure 5

The data suggest that non-EU origin employees’ median earnings have progressed somewhat faster over time. For example, while 2015 non-EU entrants took around six years to reach the overall median wage, 2021 entrants had already exceeded it after two years. Indeed, even those who entered in 2023 were at 95% of overall median earnings after one year; it took those entering in 2016 four years to reach the same position. This implies that either more recent non-EU arrivals were seeing strong earnings growth relative to the overall workforce, or that lower earners were disproportionately leaving the employee workforce within the first few years (for example, international students working part time before leaving the country)—or some combination of the two. Meanwhile, EU-origin workers who first entered the labour market in 2021 and 2022 appear to earn more, relative to the median wage, than earlier cohorts, but their earnings growth is weaker than their non-EU counterparts.

While more recent non-EU cohorts’ average earnings have risen faster over time, the relative earnings of non-EU employees overall fell between 2021 and 2023 (Figure 6). How can the two be squared? Whereas the progression data look at each cohort separately, the overall picture depends on the size of each cohort. In other words, since non-EU migrants earn considerably less when they first enter the labour market, the overall earnings of non-EU employees will be lower when there are more new entrants, as was the case between 2022 and 2024 (see Figure 2). This is a compositional effect.

Figure 6

Conclusion

The analysis presented above is based on aggregate data only – we follow groups whose composition changes over time, and do not have information on important factors which impact earnings, such as gender and age, nor on hours worked or self-employment. Nevertheless, the data covers more than 30 million employees, and tells us a considerable amount about the more than 2 million non-EU origin migrant workers who have entered the UK labour market since the pandemic. Our key findings are:

• Substantial shares of migrants leave the UK’s employee workforce within the first few years, and this was particularly the case among EU workers who started working in the UK under free movement. More recent migrants, especially from outside the EU, seem more likely to remain.
• The relative earnings of new migrants from both within and outside the EU are, on average, relatively stable and have changed little relative to the pre-pandemic period. There have been bigger changes in the distribution of earnings. For non-EU employees, the gap between low and high earners has decreased, while it has increased for EU employees.
• The recent drop (and slight recovery in 2024) in the overall average earnings of non-EU migrants is currently primarily driven by compositional effects – that is, the changing size of the newly arrived workforce – rather than a fall in the average earnings of new migrant cohorts.
• EU-origin entrants in 2021 to 2023 earned more than previous cohorts. However, earnings growth was lower than for non-EU citizens who started working in the same year, even though both groups now face the same migration rules.
• Earnings progression among the very large cohorts of new non-EU entrants in 2021 to 2023 appears to have been faster than for those who arrived in the pre-pandemic period, with those who arrived in 2021 and 2022 already seeing average earnings higher than the national average. It is possible that this is driven by the large number of international students, many of whom work part-time during their studies and so have initially low earnings.

Given the changes to the migration system and the resulting very large increase in the number of new entrants, the stability in earnings is surprising. Of course, this is still very early: we are observing the first two or three years of earnings trajectories, which in many cases have some decades left to run. Much will depend on the composition of employees who stay in the UK, but also on labour market developments in the sectors in which they are concentrated.

Acknowledgements

Thanks to Michael O’Connor for comments on a previous draft. This analysis was produced with the support of Trust for London, one of the largest independent charitable foundations in London, which supports work that tackles poverty and inequality in the capital. More details at www.trustforlondon.org.uk.

 

Underlying data – HMRC RTI earnings by nationality (2025)